A BRIEF SUMMARY OF

EMINENT DOMAIN LAW AND SERVICES OFFERED

Government agencies have the right to take property under the law of eminent domain.  Although agencies may acquire property without the consent of the property owner, they are required under both the federal and state Constitutions to pay just compensation for the property taken.  Just compensation is defined as the fair market value of the property.  Under eminent domain law fair market value is the highest price that a knowledgeable buyer would offer to a knowledgeable seller under circumstances in which neither is respectively required to buy or sell but are ready and able to do so.

In addition to the fair market value of the property that is taken, if that property is part of a larger parcel, the property owner may be entitled to compensation as a result of severance damages suffered by the remainder of the property.  Severance damages are measured by the difference between the unit value of your property, e.g., square foot value, acre value, etc., before the commencement of the eminent domain action and the unit value of the remainder of the property after part of the property is taken by the agency.   Thus, as an example, if 10 acres is taken from a 50 acre parcel and the value per acre of the 50 acres prior to the take is $500,000 per acre, and the value of the remainder acreage after the take is $400,000 per acre then the property owner has suffered damages of $100,000 per acre or $4,000,000 in addition to the $5,000,000 compensation for the 10 acres taken.

            A business owner who is displaced as a result of an eminent domain taking is entitled to compensation for the value of fixtures and equipment which cannot be economically moved to a new location.  Further, the value of loss of business goodwill that results from the taking is also compensable.

Generally, both real property owners and business owners are entitled to compensation for the expenses associated with moving to a new location.  Additionally, there may be property tax and/or income tax benefits that accrue to the owner as a result of the taking.  When funds are  received as a result of settlement or judgment the property owner may be entitled to favorable tax benefits.  The profits which the property owner receives are granted special status for income tax purposes by both the Internal Revenue Service and the California Franchise Tax Board.  Generally, the property owner may choose to reinvest these profits into similar property within 3 years of the receipt of the profits and thereby defer income tax consequences.  Additionally, the property owner may be entitled to special treatment which results in lower real property taxes when he purchases other real property to replace the property that was taken by eminent domain or threat of eminent domain.

For the last 20 years a large part of my practice has involved the defense of eminent domain lawsuits.  In most cases I am retained to maximize the compensation that the property owner receives from the government agency, that is, to obtain as much money for the property owner as reasonably possible.  In cases in which I am retained to maximize the property owners compensation, my fees are most often based upon a percentage of the compensation received in excess of the prior offer made by the condemning agency.  Thus, in order to earn a fee I must obtain a judgment or settlement which is greater than the highest offer made before I was retained.  If I am unable to obtain a greater settlement or judgment than the property owner was previously offered then I have not earned a fee and no attorney's fees are payable.  Costs incurred on behalf of the property owner are the responsibility of the property owner.  These include court filing fees, appraisal fees and related costs.

            Generally the agency at the time of the filing of the eminent domain case or shortly thereafter will deposit the amount of its offer in the State of California Condemnation Fund or the Superior Court as a precondition to obtaining possession of the property prior to judgment.  Generally, a court order may be obtained to release these funds to the property owner.  The case then proceeds with respect to the issue of the property owner's entitlement to additional funds.  Under these circumstances the property owner receives the money offered by the agency without losing his right to seek a larger sum.

            In most cases a satisfactory settlement is reached without the necessity of the property owner appearing in court.  The property owner is relieved of the responsibility and burden of dealing with the government agency, its agents, representatives, or attorneys.  That becomes my responsibility.

            If you have questions with respect to eminent domain proceedings, what constitutes reasonable compensation, court procedures, or any other matters which relate to eminent domain takings in general or your case in particular, you may contact me by telephone or for an appointment.  There will be no fee for the first consultation.

For the last 20 years a majority of my practice has involved the defense of eminent domain lawsuits.  In most cases I am retained to maximize the compensation that the property owner receives from the government agency, that is, to obtain as much money for the property owner as reasonably possible.  In cases in which I am retained to maximize the property owner's compensation, my fees are most often based upon a percentage of the compensation received in excess of the prior offer made by the condemning agency.  Thus, in order to earn a fee I must obtain a judgment or settlement which is greater than the highest offer made before I was retained.  If I am unable to obtain a greater settlement or judgment than the property owner was previously offered then I have not earned a fee and no attorney's fees are payable.  Costs incurred on behalf of the property owner are the responsibility of the property owner.  These include filing fees, appraisal fees and related costs.  Fees may also be charged on an hourly basis.

SUMMARY

All property and business owners are entitled to just compensation the highest price a knowledgeable buyer would offer.

If only part of the property is taken the property may be entitled to compensation for severance damages.

A business owner who is displaced may be entitled to compensation for the value of fixtures and equipment and loss of business goodwill.

The property owner may be entitled to income tax and property tax benefits.

Generally a property owner may receive the amount offered by the agency and still seek additional compensation.

If I am retained on a contingency fee basis the fee is payable only from recovery which exceeds the last offer made to the property owner before I was retained. Hourly fees are also available.

Michael O. Collins, Esq.

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